Chronic and transitory poverty: Evidence from Egypt, 1997-99

This paper uses a panel data of 347 households in Egypt to measure changes in household consumption during 1997-99 and to identify causes behind the changes. Per capita consumption has decreased for the households during this time. The decrease has not been dramatic, but it has occurred at all points along the distribution. Over the two-year period, the number of households who have fallen into poverty is over twice as large as the number of households who have climbed out of poverty. About two-thirds of overall poverty is chronic (average consumption over time is below the poverty line), and almost half of all poor are always poor. We use quantile regression methods to identify the factors that explain total, chronic, and transitory poverty. While our analysis is able to document the extent of transitory poverty, it performs relatively poorly in explaining the determinants of this type of poverty. The predominantly chronic nature of poverty in our sample, and our ability to identify associated characteristics, strengthens the case for targeting antipoverty interventions, such as food subsidies. (C) 2002 Elsevier Science Ltd. All rights reserved.